Reuters blog archive
from Expert Zone:
(Any opinions expressed here are those of the author and not of Thomson Reuters)
It’s been an exciting week at Davos. The annual meeting of the World Economic Forum this year was refreshingly different from previous editions. There is a general sense of optimism.
Although the effects of the recent crisis linger on, businesses and business leaders are acknowledging that we are seeing signs of recovery. In Davos, I had conversations with business leaders, heads of industry bodies, as also members of the academic and media fraternity. Each of these conversations resonated optimism.
(Pictures: World Economic Forum)
I also saw a few themes and points of view being discussed frequently, not only in my own conversations but also in several sessions at Davos. The most popular one was of the relevance of the theme of the annual meeting.
Everyone seemed to agree that the need of the hour is to reshape the world to ensure that every individual has equal access to an acceptable standard of living. The world of extremes in which we live today is not a sustainable one. The ever-increasing gap between the haves and the have-nots is unacceptable. More importantly, it is not conducive for socio-economic progress.
With all signs showing the Canadian economic miracle is fading, the Bank of Canada is understandably starting to sound more dovish. The Canadian dollar has got a whiff of that, down about 10 percent from where it was this time last year.
But that doesn't mean Governor Stephen Poloz is ready to signal on Wednesday that his rate shears are about to get hauled out of the shed.
from Expert Zone:
(This piece comes from Project Syndicate. The opinions expressed are the author's own) For the last few years, economists have been running through the alphabet to describe the shape of the long-awaited recovery -- starting with an optimistic V, proceeding to a more downbeat U, and ending up at a despairing W. But now a deeper anxiety is beginning to stalk the profession: the fear of what I call an "L-shaped" recovery.
But while volatility is on the rise - surely partly a result of thinned trading volumes during the peak summer vacation season - the consensus around when the Fed will start cutting back hasn't budged.
After bad economic news from Germany, China and the United States over the past few weeks, here are two more. Brazil and India, two of the world's largest emerging economies, are increasingly vulnerable to another crisis or to the eventual end of the ultra-loose monetary policies in developed economies after five years of a severe global slowdown.
Weak demand for Brazil's exports and the voracious appetite of local consumers for imported goods widened the country's current account deficit to 2.93 percent of GDP in the 12 months through March, the widest gap in nearly eleven years. In dollar terms, that amounts to $67 billion.
from Global Investing:
If the pure pursuit of greed is no longer good in the post-crisis world, what defines the new "good"?
That's when you start to consider "Impact Investing", a type of investment that pursues measurable social and environmental impacts alongside a financial return. According to a report prepared for the Rockefeller Foundation, approximately 2,200 impact investments worth $4.4 billion were made in 2011.
from The Great Debate:
Four years ago world leaders, meeting in the G20 crisis session, agreed they would all work to move from recession to growth and prosperity. They agreed to a global growth compact to be delivered by combining national growth targets with coordinated global interventions. It didn’t happen. After the $1 trillion stimulus of 2009, fiscal consolidation became the established order of the day, and so year after year millions have continued to endure unemployment and lower living standards.
Only now are there signs that the long-overdue shift in national macro-economic policies may be taking place. The new Japanese government is backing up a "minimum inflation target" with a multi-billion-dollar stimulus designed to create 600,000 jobs. In what some call the “reverse Volcker moment,” Ben Bernanke has become the first head of a central bank for decades to announce he will target a 6 percent level of unemployment alongside his inflation objective. And the new governor of the Bank of England, Mark Carney, has told us that "when policy rates are stuck at the zero lower bound, there could not be a more favorable case for Nominal GDP targeting.” Side by side with this shift in policy, in every area but the Euro, there is also policy progress in China. It may look from the outside as if November’s Communist Party Congress simply re-announced their all-too-familiar but undelivered wish to re-balance the economy from exports to domestic consumption, but this time the promise has been accompanied by a time-specific commitment: to double average domestic income per head by 2020.
from Global Investing:
The new year starts with a markets 'whoosh', thanks to some form of detente in DC -- though this one was already motoring in 2012. The New Year’s Eve rally was the biggest final day gain in the S&P500 since 1974, for what it's worth. And for investment almanac obsessives, Wednesday's 2%+ gains are a good start to so-called “five-day-rule”, where net gains in the S&P500 over the first five trading days of the year have led to a positive year for equity year overall on 87 percent of 62 years since 1950.
So do we have a fiscal green light stateside for global investors? Or does it just lead us all to another precipice in two months time? Well, markets seem to have voted loudly for the former so far. And to the extent that at least some bi-partisan progress reduces the risk of policy accident and renewed recession, then that's justified. And Wall St's relief went global and viral, with eurostocks up almost 3% and emerging markets up over 2% on Wednesday. Even the febrile bond markets sat up and took notice, with core US and German yields jumping higher while riskier Italian and Spanish yields skidded to their lowest in several months.
from Global Investing:
The big easing continues. A major surprise today from the Bank of Thailand, which cut interest rates by 25 basis points to 2.75 percent. After repeated indications from Governor Prasarn Trairatvorakul that policy would stay unchanged for now, few had expected the bank to deliver its first rate cut since January. But given the decision was not unanimous, it appears that Prasarn was overruled. As in South Korea last week, the need to boost domestic demand dictated the BoT's decision. The Thai central bank noted:
The majority of MPC members deemed that monetary policy easing was warranted to shore up domestic demand in the period ahead and ward off the potential negative impact from the global economy which remained weak and fragile.
from Chrystia Freeland:
President Barack Obama did a miserable job of making his own case last week. But speak to his supporters and the pitch is clear: The American middle class is being hollowed out; Obama's self-appointed mission is to try to save it.
That is what I heard from Jeffrey Liebman, one of the president's economic advisers, at a debate about the election I moderated at Columbia University on Monday. Liebman said the central difference between his candidate and Mitt Romney was the president's view that trickle-down economics doesn't work. Instead, he believes policy needs to focus on the middle class. Economic growth, he said, should come from the middle and radiate out.